How long until EVs reach price parity with ICEs?

With the Tesla Model 3 starting production 2 weeks early (the first time Elon has been early on a business target – which is awesome) and all the buzz about electric vehicle (EVs) sales increasing, and manufacturers announcing worthy goals in cleaning up their products, such as Volvo announcing it will stop production of all internal combustion engine vehicles (ICEs) by 2019.

It raises a question,

When will manufacturing cost of making EVs reach parity with ICEs?

This is the subject of the recent Bloomberg New Energy Finance (BNEF) report “When will Electric Vehicles be cheaper than Conventional Vehicles”

The BNEF report’s methodology isolates out the cost of the vehicle (structure, wheels etc), the drive train and then the battery. It then factors in speed in which the cost of batteries will drop, “currently battery costs are reducing at about 19% per cumulative doubling of manufacturing capacity.” It also factors in a slight increase in ICE manufacturing cost due to emissions regulation demanding greater efficiency, improvement in battery technology (energy density), reduction in weight of EVs over time and associated changes in power requirements/battery size requirements of EVs decreasing over time.

The prediction of BNEF is the earliest EVs will reach cost parity with ICEs will be 2025, at which point approximately ~25.5% of an EV will be the cost of the battery. It is currently 48-55% and will drop to 18-23% by 2030.

This means the rise of EV ownership in Australia could reach ~7% of total fleet by 2025 without government incentives from 0.1% where it is currently. As 8.3% of 504 Victorians answered “I would willing to pay more for an electric vehicle than a petrol or diesel” reported by the Electric Vehicle Council of Australia in “State of electric vehicles in Australia”.

Do you want to become or are you one of those pioneers willing to pay more to transition to a cleaner economy?